This content is from: Local Insights

Macau: New financial leasing rules

Within the framework of its overall goal of diversifying the local economy, the Macau SAR (MSAR) government aims to revitalise the financial leasing system. It has submitted a draft bill to the Legislative Council (LegCo) on a new regime for financial leasing companies, which will replace the existing Decree-Law 51/93/M of September 20.

According to the draft bill, which legislators have already approved in general, the financial leasing companies may engage, not only in the business of financial leasing per se, but also in the disposal and management of leased assets, in exchange operations, and in other activities that are authorised by the supervisory body: the Monetary Authority of Macau (AMCM).

Banks and financial leasing companies authorised to operate in the MSAR may also incorporate subsidiaries to hold and manage specific financial leasing projects, subject only to advance communication of their intentions to the AMCM.

Both financial leasing companies and subsidiaries qualify as financial institutions, hence they are subject to the financial system legal regime (Decree Law 32/93/M, of July 5). Under the previous regime they qualified as credit institutions, therefore the supervision rules for these types of entities have been relaxed under the new legislation.

The LegCo has also approved in general a draft bill on a new tax incentive regime for financial leasing, to replace the existing Decree-Law 1/94/M of May 23. It provides an exemption of stamp duty for the company's incorporation and share capital increase(s), and for equipment-related leasing contracts. The purchase of a company's first real estate property is also exempt from stamp duty, provided it is used exclusively by the company as its office. In respect of complementary income tax, it should be noted in particular that a fixed rate of five percent applies to the income generated by financial leasing activity, and that there is an exemption as regards the lessor's income generated abroad – both apply to the lessor's shareholders.

Nuno Riquito
Bruno Almeida

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